American Indians living on reservations who want to buy homes are significantly more likely to have high-priced mortgages, and those mortgage rates average nearly 2 percentage points higher, than non-Native Americans living outside reservations.

That’s according to a study from the Federal Reserve Bank of Minneapolis’ Center for Indian Country Development (CICD). It is at:

An Indian family purchasing a $140,000 home on a reservation could pay $107,000 more over the course of a 30-year loan than a non-Native American purchasing a home outside a reservation would pay.

“This report should serve as notice to policymakers, lenders, and housing advocates that there is an urgent and deeply troubling issue around housing and mortgage costs across Indian Country,” said Minneapolis Fed Assistant Vice President and CICD Director Patrice Kunesh.

Written by CICD research economist Donna Feir and data analyst Laura Catteneo, “The Higher Cost of Mortgage Financing for Native Americans,” confirms that affordable access to capital and quality housing is a daunting challenge facing Indians, particularly those who live on or near reservations.

Feir and Catteneo’s research finds:

  • Almost 30 percent of loans made to American Indian and Alaska Natives for reservation properties were higher cost—that is, costing more in interest rates than those available to non- Indians.
  • Only 10 percent of loans in the same time period made to non-Native borrowers for properties near reservations were higher cost; thus, three times the proportion of Native borrowers faced higher-cost loans than did non-Indian borrowers.
  • These higher-cost home loans are predominately found on reservations. Manufactured homes account for 25 percent to 35 percent of the difference in the cost of financing.

“We believe further investigation around the manufactured home financing market structure might be necessary if home loans are going to be made equally affordable for [Indian] borrowers,” said Feir.

The report concludes: “These results potentially suggest that without other institutional market reforms, promoting homeownership as a method of increasing Native American equity and assets may be less effective than for other populations.”

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